SPY is currently attempting to complete a 50% retracement that really kicked off when the Fed announced a $10B taper to the $85B program. For literally the first time this year we have some serious volume on the upside, which some may find concerning as a capitulation type rally. Whatever the case, it's a rally and I am trading it with defined risk. Take note of the Fibonacci support and targets on the chart. QQQ never even pulled back and the weekly RSI is still extremely over-extended right now sitting at 76. I'm really not sure what else to say about the QQQ except be long, careful, and mindful of the weekly RSI. IWM came back inside this wedge type pattern so turns out that was just a bear trap into a demand zone. Next resistance is in the $115-$116 area, and support in the $112-$113 area so keep that in mind. This is a more orderly uptrend with nice corrections on the weekly RSI as well.
The internals are somewhat concerning in the same respects that I have been talking about for a few weeks now. The 'S&P percent of stocks above 200 SMA' on the right is continuing to diverge from the S&P 500 and the VIX is continuing to catch bids on the dips (as you can see the tails from the past two days). So, the internal on the right tells me it is a stock pickers market that is getting smaller and smaller and the VIX tells me that people are starting to protect themselves. If that internal on the right continues to diverge as the S&P and NASDAQ continue to sustain overbought weekly RSI's, I will really start to get defensive. Although all of my trades have defined risk, it is a matter of putting on more or not.I know next week is a short week, but it doesn't take away from the structure these stocks are presenting and that means I am going to keep them on watch. Here goes:
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AAPL - Really like the location (above trend-line) with bullish reactions off of it as well as the 50% retracement
AIG - Nice consolidation and trying to break out of it now, held the trendline.. low volatility, watching debit spreads
AMZN - Pretty much already made a big move but targets still higher, if can get a good entry I'm likely to take it
BA - Held a demand zone and now trying to make a leg higher.. nice structure
BIDU - Bulls regained control.. above $170 I like it
CELG - Very nice 50% retracement.. targets $10+ away
COST - 50% retracement in a huge weekly uptrend.. high probability to be bought
DDD - low volatility, short squeeze in progress and targets still above.. need a fresh signal to enter
FCX - nice structure.. potential to make new highs.. low volatility, debit spreads
LNKD - still holding 50% retrace.. need to see more before entry
TRIP - real nice structure & 50% retrace.. targets way above
TSLA - need to see more but hasn't died yet so long as $140 can hold
TWTR - very nice trend, i think all targets get hit.. need a fresh signal for new entries but options are very volatile here
TXN - holding demand zone, low volatility.. like others better but still looks good
VMW - trade was last week but target still above at $96.. need fresh signal for new entries
WFM - trade was also last week but like the structure here if a fresh signal fires
XOM - this could continue parabolic as it has been.. potential for entry above $97.5
YUM - reluctant to post this one but that move was nice before retrace, could see something similar as it holds 50%
Yep, pretty slow week next week but setups are still looking good. Not sure how that is going to play out with Christmas going on.
Let me know what you guys think of the new format in the comments, seriously..
Take care and happy holidays to everyone,
-Michael
